Auditors: EU Likely Overstating Spending on Climate Projects

In the European Union, spending on climate protection projects is likely being overstated by billions of euros, EU auditors reported on Wednesday, citing examples of countries claiming that spending on IT systems and salaries are ecological measures, including Croatia, as reported by Reuters.

The EU has committed to spending at least 37 percent of its €700 billion COVID-19 recovery fund, which consists of loans and grants, on measures that respond to climate change.

According to the EU’s own assessment, countries have exceeded this target and by February had allocated €275 billion, or 42.5 percent of the funds allocated so far, for investments that help meet green goals.

This figure may overstate the EU’s spending on ‘green’ measures by at least €34.5 billion, the auditors said.

An analysis by the European Court of Auditors showed that EU countries have labeled numerous projects as green despite having only a weak connection.

For example, they included IT systems for the digitalization of the water supply system. Croatia assessed this as a 40 percent contribution to climate, while auditors stated it should be 0 percent.

In another example, Slovakia included the salaries of its staff managing the COVID-19 fund in expenditures that favor climate protection, the auditors said.

Unclear Climate Benefits

A Portuguese investment in public transport, labeled as 100 percent ecological, did not account for the emissions that would be produced by the construction of the project – making it difficult to assess net savings after completion, the auditors said.

Similarly, the impact of a Greek hydroelectric plant was not assessed based on its negative impact on biodiversity.

In response, a European Commission spokesperson said that the COVID-19 fund has directed significant resources to green projects and that it has thoroughly checked the planned spending of countries.

The auditors also cited positive examples, including a Greek plan worth €1.25 billion for energy savings in over 100,000 homes.

Other spending labeled as green includes renewable energy projects, railways, and electric vehicle charging infrastructure.

However, in general, the EU’s system for ranking the climate contributions of projects, which assigns them a score of zero, 40, or 100 percent, has not been precise enough and leads to overstatement, the auditors said.

This method ‘ultimately provides little indication of how much money is going directly to the green transition,’ said Joelle Elvinger, the auditor who led the preparation of the report.

The Commission stated that its methodology provides sufficient accuracy, and imposing more detailed rules would create complex bureaucracy for future funds.